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These Stocks Will Struggle Should Oil & Gas Prices Not Pick Up

While we cheer strong inventory draws in the U.S., there are still a host of bearish factors that might induce oil’s fall into the mid-$30s and spell doom for investors. With the number of drilling rigs in the oil patch climbing week after week, shale drilling remains resilient. Moreover, restored output from exempted African producers Libya and Nigeria have added to the glut and further slows the rebalancing of the market.

Therefore, although OPEC-led production cut efforts have helped commodity prices recover and stabilize somewhat since late 2016, they remain significantly below 2014 levels.

In fact, as long as there is big oil surplus, the arduous market environment will continue, suggesting that the odds are firmly stacked against a sustained rally. With U.S. crude stockpiles soaring on the back of robust shale production, money managers do not rule out chances of more pain ahead for energy stocks.

As there are no guarantees that things will improve in the near-to-medium term, investors would be better off ignoring the following set of stocks.

Integrated Majors No Longer Safe

Despite the integrated majors’ scale advantage and consistency in delivering shareholder returns throughout the energy cycles, the pessimism comes in the wake of oil’s horror show that has seen black gold’s price come down from some $110 per barrel in mid-2014 to less than $50 now...